Jennifer Boscardin-Ching, Client Portfolio Manager Pictet Asset Management.

“The Bill is widely described as the most significant federal climate action legislation in U.S. history. The Act appropriates a record $369 billion for energy and climate programs over the next ten years, with the goal of reducing U.S. greenhouse gas emissions by 40% from 2005 levels, the costs of which would be largely offset by revenue raised through tax reforms included in the Act. Specifically, the clean energy and climate elements of the bill will help accelerate the clean energy transition."

• The extension of renewable energy tax credits will continue supporting large scale growth of the renewable energy industry in the US, encouraging the acceleration of the transition towards renewables.
• The increased use and production of renewable energy sources will inevitably lead to storage issues, so there will need to be a renewed push on the development of energy storage solutions. Until now, energy storage (mostly battery storage) tax credits were tied to solar energy projects, so new tax credits for stand-alone storage will allow the energy storage solutions market to take off and be sited in the most lucrative locations (i.e. where grid congestion is high) without the constraints of solar energy.
• By lifting the current 200,000-unit per manufacturer cap on the $7,500 consumer tax credit for new EVs, the Act will also drive increased penetration of smart and electric mobility, increasing demand and strengthening local capacity by providing $20bn in loans to build new clean vehicle manufacturing facilities in the US.
• The bill also targets an increase in domestic production and content, with tax credits for domestic manufacturers of wind and solar components, battery cells and modules, and other critical minerals in the clean energy value chain.
• Alongside the transition towards renewable energy, large greenhouse gas emitters will be penalized by imposing a fee on excess methane emissions from oil and gas facilities that exceed a certain threshold. This would further increase competitiveness of the renewable industry vs fossil fuels”